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REPUBLIC ACT NO.

9178
AN ACT TO PROMOTE THE ESTABLISHMENT OF BARANGAY MICRO BUSINESS ENTERPRISES (BMBEs), PROVIDING INCENTIVES AND BENEFITS THEREFOR, AND FOR OTHER PURPOSES

PRELIMINARY PROVISIONS

Section 1.

"Barangay Micro Business Enterprises (BMBEs) Act of 2002.“

Short Title. — This Act shall be known as the

Sec. 2. Declaration of Policy. — It is hereby declared to be the policy of the State to hasten the country's economic development by encouraging the formation and growth of barangay micro business enterprises which effectively serve as seedbeds of Filipino entrepreneurial talents, and integrating those in the informal sector with the mainstream economy, through the rationalization of bureaucratic restrictions, the active intervention of the government specially in the local level, and the granting of incentives and benefits to generate much-needed employment and alleviate poverty.

Sec. 3. Definition of Terms. — As used in this Act, the following terms shall mean:

"Barangay Micro Business Enterprise," hereinafter referred to as BMBE, refers to any business entity or enterprise engaged in the production, processing or manufacturing of products or commodities, including agro-processing, trading and services, whose total assets including those arising from loans but exclusive of the land on which the particular business entity's office, plant and equipment are situated, shall not be more than Three Million Pesos (P3,000,000.00). The above definition shall be subject to review and upward adjustment by the SMED Council, as mandated under Republic Act No. 6977, as amended by Republic Act No. 8289. For the purpose of this Act, "services" shall exclude those rendered by any one, who is duly licensed by the government after having passed a government licensure examination, in connection with the exercise of one's profession.

"Certificate of Authority" is the certificate issued granting the authority to the registered BMBE to operate and be entitled to the benefits and privileges accorded thereto. "Assets" refers to all kinds of properties, real or personal, owned by the BMBE and used for the conduct of its business as defined by the SMED Council: Provided, That for the purpose of exemption from taxes and fees under this Act, this term shall mean all kinds of properties, real or personal, owned and/or used by the BMBE for the conduct of its business as defined by the SMED Council.

"Registration" refers to the inclusion of BMBE in the BMBE Registry of a city or municipality. "Financing" refers to all borrowings of the BMBE from all sources after registration.

REGISTRATION AND OPERATION OF BMBEs

Sec. 4.

Treasurer of each city or municipality shall register the BMBEs and issue a Certificate of Authority to enable the BMBE to avail of the benefits under this Act. Any such application shall be processed within fifteen (15) working days upon submission of complete documents. Otherwise, the BMBEs shall be deemed registered. The Municipal or City Mayor may appoint a BMBE Registration Officer who shall be under the Office of the Treasurer. Local government units (LGUs) are encouraged to establish a One-Stop-Business Registration Center to handle the efficient registration and processing of permits/licenses of BMBEs. Likewise, LGUs shall make a periodic evaluation of the BMBEs' financial status for monitoring and reporting purposes.

Registration and Fees. — The Office of the

The LGUs shall issue the Certificate of Authority promptly and free of charge. However, to defray the administrative costs of registering and monitoring the BMBEs, the LGUs may charge a fee not exceeding One Thousand Pesos (P1,000.00). The Certificate of Authority shall be effective for a period of two (2) years, renewable for a period of two (2) years for every renewal. As much as possible, BMBEs shall be subject to minimal bureaucratic requirements and reasonable fees and charges.

Sec. 5.

person, natural or juridical, or cooperative, or association, having the qualifications as defined in Sec. 3(a) hereof may apply for registration as BMBE.

Who are Eligible to Register. - Any

Sec. 6.

BMBE shall report to the city or municipality of any change in the status of its ownership structure, and shall surrender the original copy of the BMBE Certificate of Authority for notation of the transfer.

Transfer of Ownership. — The

INCENTIVES AND BENEFITS

Sec. 7. Exemption from Taxes and Fees. — All BMBEs shall be exempt from income tax for income arising from the operations of the enterprise.

The LGUs are encouraged either to reduce the amount of local taxes, fees and charges imposed or to exempt the BMBEs from local taxes, fees and charges.

Sec. 8. Exemption from the Coverage of the Minimum Wage Law. — The BMBEs shall be exempt from the coverage of the Minimum Wage Law: Provided, That all employees covered under this Act shall be entitled to the same benefits given to any regular employee such as social security and healthcare benefits.

Sec. 9.

Act, the Land Bank of the Philippines (LBP), the Development Bank of the Philippines (DBP), the Small Business Guarantee and Finance Corporation (SBGFC), and the People's Credit and Finance Corporation (PCFC) shall set up a special credit window that will service the financing needs of BMBEs registered under this Act consistent with the Bangko Sentral ng Pilipinas (BSP) policies, rules and regulations. The Government Service Insurance System (GSIS) and Social Security System (SSS) shall likewise set up a special credit window that will serve the financing needs of their respective members who wish to establish a BMBE. The concerned financial institutions (FIs) are encouraged to wholesale the funds to accredited private financial institutions including community-based organizations such as credit, cooperatives, nongovernment organizations (NGOs) and people's organizations, which will in turn, directly provide credit support to BMBEs.

Credit Delivery. — Upon the approval of this

All loans from whatever sources granted to BMBEs under this Act shall be considered as part of alternative compliance to Presidential Decree No. 717, otherwise known as the Agri-Agra Law, or to Republic Act No. 6977, known as the Magna Carta for Small and Medium Enterprises, as amended. For purposes of compliance with Presidential Decree No. 717 and Republic Act No. 6977, as amended, loans granted to BMBEs under this Act shall be computed at twice the amount of the face value of the loans.
Any existing laws to the contrary notwithstanding, interests, commissions and discounts derived from the loans by the LBP, DBP, PCFC and SBGFC granted to BMBEs as well as loans extended by the GSIS and SSS to their respective memberemployees under this Act shall be exempt from gross receipts tax (GRT).

Any existing laws to the contrary notwithstanding, interests, commissions and discounts derived from the loans by the LBP, DBP, PCFC and SBGFC granted to BMBEs as well as loans extended by the GSIS and SSS to their respective memberemployees under this Act shall be exempt from gross receipts tax (GRT).

To minimize the risks in lending to the BBEs, the SBGFC and the Quedan and Rural Credit Guarantee Corporation (QUEDANCOR) under the Department of Agriculture, in case of agribusiness activities, shall set up a special guarantee window to provide the necessary credit guarantee to BMBEs under their respective guarantee programs.

The LBP, DBP, PCFC, SBGFC, SSS, GSIS, and QUEDANCOR shall annually report to the appropriate Committees of both Houses of Congress on the status of the implementation of this provision.

The BSP shall formulate the rules for the implementation of this provision and shall likewise establish incentive programs to encourage and improve credit delivery to the BMBEs.

Sec. 10. Technology Transfer, Production and Management Training, and Marketing Assistance. — A BMBE Development Fund shall be set up with an endowment of Three Hundred Million Pesos (P300,000,000.00) from the Philippine Amusement and Gaming Corporation (PAGCOR) and shall be administered by the SMED Council.

The Department of Trade and Industry (DTI), the Department of Science and Technology (DOST), the University of the Philippines Institute for Small Scale Industries (UP ISSI), Cooperative Development Authority (CDA), Technical Education and Skills Development Authority (TESDA), and Technology and Livelihood Resource Center (TLRC) may avail of the said Fund for technology transfer, production and management training and marketing assistance to BMBEs.

The DTI, in coordination with the private sector and non-government organizations (NGOs), shall explore the possibilities of linking or matching-up BMBEs with small, medium and large enterprises, and likewise establish incentives therefor. The DTI, in behalf of the DOST, UP ISSI, CDA, TESDA and TLRC shall be required to furnish the appropriate Committees of both Houses of Congress a yearly report on the development and accomplishments of their projects and programs in relation to technology transfer, production and management training and marketing assistance extended to BMBEs.

REGISTRATION OF BARANGAY MICRO BUSINESS ENTERPRISE (BMBE)

SECTION 4. PLACE OF REGISTRATION

The Office of the City Treasurer of Davao shall register Barangay Micro Business Enterprises (BMBE) and issue a Certificate of Authority (CA) upon payment of registration fess as provided for in Section 8 hereof, to enable the BMBE to avail of the benefits and incentives under R.A 9178, otherwise known as the “Barabgay Micro Business Enterprises Act of 2002”, Provided, that only one Certificate of Authority shall be issued fro each BMBE and only by the City Treasurer’s Office of Davao.

Sec. 11. Trade and Investment Promotion. — The data gathered from business registration shall be made accessible to and shall be utilized by private sector organizations and nongovernment organizations for purposes of business matching, trade and investment promotion.

Sec. 12. Information Dissemination. — The Philippine Information Agency (PIA), in coordination with the Department of Labor and Employment (DOLE), the DILG and the DTI, shall ensure the proper and adequate information dissemination of the contents and benefits of this Act to the general public especially to its intended beneficiaries specifically in the barangay level.

SECTION 5. REGISTRATION OFFICER AND ITS FUNCTIONS

The Business Tax and License Chief of the Davao City Treasurer’s Office shall Act of the BMBE Registration Officer who shall have the following functions: 1.) Handle the efficient registration and processing of permits, licenses of BMBE’s;
2. ) Monitor the operation of the BMBE’s and make a periodic evaluation of the BMBE’s financial status; The City Treasurer may, however, appoint District Treasurers to assist the BMBE Registration officer in the latter’s duties and responsibilities, if and when necessary;

SECTION 6. QUALIFIED REGISTRANTS

Any person natural or judicial, cooperative or association, having the qualifications enumerated below, may apply for registration as BMBE:

Have an asset size of not more than Three Million Pesos (P3,000,000.00) exclusive of the land on which the business entity’s office, plant and equipments are located; Engaged in the production processing or manufacturing of products or commodities, including agro-processing trading and services; Its principal pace of business is located within the City the City of Davao.

SECTION 7. REQUIREMENTS AND PROCEDURES FOR REGISTRATION

The following are the procedures and requirements when applying for registration ad BMBE:
1.) An applicant for BMBE shall go to the City Treasurer’s Office of Davao where the business is located; 2.) The applicant shall fill-up the BMBE Form 01 (application form) in triplicate to be signed by the owner manager of the entity applying for registration and shall attach its approved Mayor’s Permit and Financial Statement and if applicable, either of the following: the Business Name Registration (for individual/single proprietorship), Securities and Exchange Commission (SEC) Registration and Articles of Incorporation (for Partnership, corporation) and Cooperative Development Authority (CDA) Registration (for cooperatives) and submit them to the BMBE Registration Officer;

3.) The BMBE registration Officer evaluates the application, which shall be processed within fifteen(15) working days upon submission of complete documents. Otherwise, the BMBE shall be deemed registered; and 4.) A registered BMBE shall be issued a Certificate of Authority (CA) as proof of registration, which shall be effective fro a period of two (2) years, renewable for another period of two (2) years fro every renewal ;

SECTION 8. REGISTRATION FEES

To defray the administrative costs of registering and monitoring BMBE’s, the BMBE Registration Officer shall charge the following fees:

NET ASSET (based on financial Statement)

Registration Fee
(Php)

100,000.00 or less
More than 100, 000.00 -500,000.00 More than 500,000.00-1,000,000.00

50.00 250.00 750.00
1,000.00

More than 1,000,000.00-3,000,000.00

The registration fees that will be collected shall go directly to the City’s General fund.

SECTION 9. TRANSFER OF OWNERSHIP

The BMBE shall report to the BMBE Registration Officer any change in the status of its ownership structure, and shall surrender original copy of the BMBE Certificate of Authority for annotation of the transfer.

SECTION 10. PENALTY

Any person who shall willfully violate any provision of this Ordinance or who shall in any manner commit any act to defeat any provision of this Ordinance shall, upon conviction, be punished by fine of not more than Five Thousand Pesos (P5,000.00) or imprisonment of not more than one (1) year or both ar the discretion of the court.

SECTION 11. SEPARABILITY CLAUSE

If any provision or part of has ordinance held invalid or unconstitutional, the other parts or provisions hereof which are not affected thereby shall continue to be in full force and effect;

SECTION 12. REPEALING CLAUSE

All Ordinances, existing laws, executives orders, proclamations and administrative regulations, or part thereof, which are inconsistent with the Ordinance are hereby repealed or modified accordingly;

SECTION 13. EFFECTIVITY

This Ordinance shall take effect fifteen (15) days after its approved and publication in newspaper of general circulation, and posting at the Legislative Hall and City Hall premises and other conspicuous public places.

Q and A on Republic Act 9178 Barangay Micro Business Enterprises (BMBE) Act of 2002

1. What is the law all about?

In a nutshell, the law encourages the formation of growth of barangay micro business enterprises, by granting them incentives and other benefits. Barangay enterprises serve as the seedbeds of Filipino entrepreneurial talents which contribute to the country’s balanced economic development.

2. What is the objective of the law?

The objective is to integrate barangay micro enterprises which currently reside in the normal sector into the economic mainstream through active government intervention at the local level. By so doing jobs and incomecreating opportunities are generated in the countryside.

3. What is Barangay Micro Business Enterprise (BMBE)?

- BMBE is defined as any business enterprise engaged in production, processing, or manufacturing of products, including agro-processing, as well as tracing and services, with total asstes of not more than Three Million Pesos (P3,000,000.00) such assets shall include those arising from loans but not the land on which the office, plant, and equipment are located.

4. What are the incentives granted to BMBEs under the law?

The major ones are (1) exemption from income tax for income arising from the operations of the enterprise, and (2) exemption from the coverage of the Minimum Wage Law. However, BMBE employees will still get the same benefits as regular employees with respect to social security and healthcare benefits, (3) priority to special credit window set up specifically for the financing requirements of SMEs.

In addition, a P300 million BMBE Development Fund to be administered by the SMED council is provided. This may be tapped by specified agencies like the DTI and DOST to support technology transfer, production and management training and marketing assistance programs for BMBE beneficiaries.

5. Who may avail of the special credit window for BMBEs?

Only registered BMBEs are qualified to take advantage of the credit facility and other benefits. This means the enterprise must have a Certificate of Authority which authorizes it to operate as a BMBE.

6. Who may register as a BMBE?

- Any natural or juridical person, a cooperative or an association which meets the definition of a BMBE may apply for registration.

7. Where should I register myself as a BMBE and how long will it take for me to register and get the Certificate of Authority?

The office of the Treasurer of each City or Municipality registers the BMBE and issues the Certificate of Authority. Application shall be processed within fifteen (15) working days upon submission of complete documents, otherwise the applicant shall be deemed registered. A BMBE Registration Officer shall be appointed by the Municipal or City Mayor under the Office of the Treasurer to handle the registration.

8. How much will it cost me to register?

Registration and issuance of Certificate of authority by the LGU is free of charge and shall be done promptly to defray the administrative costs of registering and monitoring the BMBE, the LGUs are allowed to charge a fee not exceeding Pesos One Thousand (P1,000.00) The law specifies that BMBEs be subject to minimal bureaucratic requirements and reasonable fees and charges.

9. Who are the funding agencies designated to set up the special credit window for BMBE?

The Land Bank of the Philippines (LBP), Development Bank of the Philippines (DBP), the Small Business Guarantee and Finance Corporation (SBCFC), and the People’s Credit and Finance Corporation (PCFC), are the key lending institutions designated to set up the credit window in addition, the Government Service Insurance System (GSIS) and the Social Security System (SSS) are mandated to set up a special credit window for the financing needs of members who wish to set up a BMBE.

Requirements for New Applicant

1.) Registration as a business entity or enterprise from the appropriate government agency (e.g., Securities and Exchange Commission (SEC), registration in the of corporation, partnership or association; Cooperative Development Authority (CDA), registration in the case of cooperative; Department of Trade and Industry (DTI) business name registration in the case of sole proprietorship);

2.) Taxpayer Identification Number (TIN); 3.) Certificate of Registration from the Bureau of Internal Revenue (BIR); 4.) Mayor’s Permit or City/Municipal Business Permit; 5. Sworn affidavit executed by the sole proprietor or the President of the enterprise, as the case may be, that the enterprise is barangay-based and microbusiness in nature and scope, in substantially the form attached as Annex “A”;

6.) Sworn Satement of Assets and Liabilities showing the values of assets owned and to be used in the conduct of business, which shall be supported by pertinent information such as the date of acquisition cost and depreciated value. In case of asset acquired during the year of registration, it shall be supported by any of the following;
  

invoice official receipt contact document or deed

7.) Pictures of the place of business and its assets, other than cash, receivables and intangibles; 8.) Copy of loan contact/s, if any and DulyNotarized Certification of Amortization Payments on the Loan; and 9.) Income Tax Return (ITR) with proof that it has been duly filed with the BIR, including attachments, if any, (for an existing business only); 10.) Sketch – place of business, in order for the CTO in charge personnel fro the evaluation.

B.) For Renewal of Registration

Documents listed in Section 3 (a) (1) to (8), inclusive; Annual Information Return (for the tear immediately preceding the renewal of registration) duly filed with the BIR, together with its Attachments; and 3.) Sketch – place of business, in order for the CTO in charge personnel fro the evaluation.

Sample Form of BMBE Form 01

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